Industrie 4.0 – about making real things and making real what matters

Manufacturing is about making real things – things we hold in our hands every day, things like a fork, a cup, a pen. It’s about processing and packaging the basic things we need to survive, like water, food and medicine. Manufacturing has a real impact on the global economy: It accounts for 70 percent of global trade. Worldwide, 77 percent of the money spent on research and development goes to manufacturing. And manufacturing is also about real people. In the EU it provides jobs for 34 million people. That’s why the digitalization of manufacturing is such a big deal. It’s not just about technology. It’s about our collective future.

Manufacturing has a real impact on the global economy: It accounts for 70 percent of global trade.

Germany’s initiative for the digitalization of manufacturing is called Industrie 4.0; in France, it’s called Industrie du Futur; in the United States, it’s called the Industrial Internet or the Internet of Things. The terms may differ, but it’s about using digital tools to make real things. Advances in the integration of these digital tools are enabling manufacturers to create a digital twin of the entire physical enterprise, from development lab to shop floor, from showroom to service.

One example: What we achieved in close collaboration with our partner Festo and our customer Optima is nothing less than a milestone in machine building. We created a filling machine for perfume bottles that can produce up to 56,000 variants – down to a lot size of one – at stable engineering and product costs. Solutions like these give manufacturers of every size very real, competitive advantages: Shorter time-to-market, greater flexibility, higher quality and improved efficiency.

Some argue that major players from Silicon Valley should not have any difficulty in also conquering the world of manufacturing. However, there’s more to the story. Here in Europe, we have an excellent understanding of industrial flows and processes. We have domain knowhow; we have in-depth knowledge of our customers’ needs. Industrie 4.0 can be a success story for European companies and the European economy as a whole.

In the EU it provides jobs for 34 million people. That’s why the digitalization of manufacturing is such a big deal.

Today, manufacturing accounts for 20 percent of global CO2 emissions. By the end of the 21st century, the world population is expected to pass the 11 billion mark and the demand for industrially produced goods will grow accordingly. One great dilemma we face is meeting the needs of the growing world population while reducing emissions to curb climate change. We won’t be able to solve this dilemma without efficient digital technologies and without Industrie 4.0.

Digitalization has the power to disrupt or even destroy existing business models, to eliminate the weak links of value chains, to transform entire industries. Just think of how digitalization has affected the photography, music and retail industries in recent decades, and how digitalization is already impacting the manufacturing, energy, infrastructure and healthcare industries.

The question is: How can we make sure that digitalization – and Industrie 4.0 as a part of it – benefits society as a whole? How can we prevent it from depriving large numbers of people of their livelihood? That’s the real challenge of digitalization. If we’re honest, we do not yet know what impact digitalization will have on society in the long term, but there are some things we can do to be prepared.

How can we make sure that digitalization – and Industrie 4.0 as a part of it – benefits society as a whole?

First, invest in education. Because digitalization is transforming all industries, digital skills should be taught at all levels and in all forms of education. But we can’t stop there. The pace of change is so fast that learning must be lifelong. Workers will have to constantly update their skills throughout their professional lives.

Second, install international, fit-for-purpose regulation. The Internet knows no national boundaries, so the regulation governing it should be supranational or even global in scope. Scalability is a key success factor for digital technologies. That’s why we need to accelerate the implementation of the Digital Single Market in Europe. Technological progress doesn’t wait for lengthy political decision-making. Any sensible form of soft law or framework setting (such as recommendations, or codes of conduct) instead of rigid legislation is welcome. Regulatory proposals should address only well-defined market failures that cannot be resolved through existing laws and the self-regulation of the market.

Third, promote an entrepreneurial and socially responsibly culture. The U.S. is known for its pioneering spirit, for the ability to think big, for the aspiration to make a difference. The European mindset evolved out of a long tradition of innovation and social responsibility. Wouldn’t it be great if we could combine the best of both cultures? I think we can. We’re doing that at Siemens, and we call that Ingenuity for life. It expresses our larger purpose: to provide innovative technologies that benefit society – and to do so in a socially responsible way.